StartUp 2.0 Act—Lucid or Lame

Of Immigrants, Entrepreneurs and the Road to Serfdom – Part IV

As promised in the concluding paragraph of part three, we begin with a candid look at the StartUp 2.0 Act, introduced June 5, 2012 in the House of Representatives asH.R. 5893 and in the Senate May 22, 2012 as S. 3217 with the stated purpose …

To jump-start economic recovery through the formation and growth of new businesses, and for other purposes.

The Senate and House versions of the bill are identical. Regrettably, they have met the same fate as myriad previous bills seeking to address the brain drain, fostering entrepreneurial growth and getting Americans back to work. That is, all have been “referred to committee”.

Can H.R. 5893 Do It

The short answer is no, but it is a start. The bill proposes a series of amendments to the Immigration and Nationality Act (8 U.S.C. 1181). The significant proposals include:

Authorization for the Secretary of Homeland Security to conditionally adjust the status of up to 50,000 aliens with doctorates or masters degrees in a STEM field

Authorizes the Secretary of Homeland Security to issue conditional immigrant visas to no more than 75,000 alien entrepreneurs

Eliminates the “per-country” limit for employment-based visas

Amends the Internal Revenue Code to eliminate capital gains taxes on the stock of qualified startups for more than five years

Amends the Internal Revenue Code to allow qualified startups to treat research expenses as a tax credit
Mandates the Secretary of Commerce to award grants, using existing federal funds, for research and development to institutions of higher learning to accelerate commercialization of innovations and discoveries

Directs the Secretary of Commerce to provide periodic reports on new business formation in general and startups in particular

In these two videos, Rubio is joined by Senators Jerry Moran (R-KS), Mark Warner (D-VA) and Chris Coons (D-DE). AOL co-founder Steve Case takes the podium in his capacity as president of the White House Council on Jobs and Competiveness and later Bob Litan, then Kauffman Foundation Vice President of Research and Policy (currently Director of Research at Bloomberg Government), also speaks in support of the proposed legislation:

SUA 2.0 stands as one of the only ways the federal government can boost job growth—by boosting the formation and growth of new businesses. It is a bipartisan legislative accomplishment that the nation’s economy sorely needs and deserves.

Yet here we are, almost eight months later, and absolutely NOTHING has transpired. The bill, though not dead, remains in its respective committee. Here we have a bipartisan piece of legislation, stalled in the House and in the Senate, while the United States continues to lose some of the best minds on the planet to countries with which we must ultimately compete.

To quote the Howard Beale character in the 1976 film “Network”, I want all of you to get up out of your chairs.

I want you to get up right now and go to the window. Open it, and stick your head out, and yell, ‘I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!’

Opposing Views

There is no shortage of workers already in our labor force who are ready, willing and able to perform jobs that STEM employers require. Bills like Startup 2.0, however, could create future shortages. Flooding our labor market with recent foreign STEM graduates, desperate to find and keep jobs in order to remain in the U.S., will further depress wages discouraging our own best and brightest from pursuing careers in these fields.

NumbersUSA®, an organization dedicated to lowering immigration rates, suggests that there is no shortage of STEM workers.

It’s the Entrepreneurs—Stupid

Plainly speaking, if the U.S. job market provides insufficient demand for immigrating STEM workers, it follows that these workers will pursue opportunities elsewhere. Furthermore, these opposing viewpoints do not consider the entrepreneurial immigrant, instead focusing on STEM workers. The fact is, the construct of the legislation will not permit unsuccessful candidates to remain in the United States. All visas are “conditional” under the terms of the proposed legislation. These opposing views are nothing short of an unsubstantiated distraction.

You can apply only if you are already in the U.S. and are an H-1B employee or have a STEM graduate degree from a U.S. university. No exceptions. If section 210 would refer to Section 102 instead of 101 of Higher Education Act of 1965 – gates to foreign entrepreneurs would open. But it says 101. Go get a U.S. STEM degree to be counted as immigrant entrepreneur.

In the next installment, we’ll look at some real-life cases. I touched on this subject a couple of years ago in regards to Brian Wong, founder of Kiip, a mobile game advertising platform. Then there is the Australian entrepreneur, in the U.S. to do graduate research, having completed his Masters and now halfway through his PhD, all funded by US sources. This entrepreneur also graduated from a Silicon Valley incubator. Yet when they award his PhD, he will have to leave the country. Sadly, some two years on, the immigration issues addressed in this blog persist.